Abstract
In the past few years, as economic crises went on in several parts of the world, flexibility and security have become central issues for employment policy makers as well as for academics. Particularly concerned with high levels of unemployment, advanced political economies are seeking new ways to curb the situation by regulating the employment market on the basis of ‘flexicurity’. The investigation presented in this book analyses to what extent worker security can be affected by flexibility strategies in different OECD countries and, in particular, in Italy over the last two decades. Does flexibility means reduced employment protections as they are commonly understood? Or can flexibility and security evolve together as current political and learned trends seek to promote? Within the public debate, flexibility is linked with a loss of security, which postulates that flexibility will have an overall negative impact on security. In this book, the authors focus on Italy but they also bring in Japanese, Spanish and German data in order to put the results into perspective.
Flexibility can be defined in several ways, such as numerical, temporal, or wage flexibility. During the last two decades, advanced economies developed measures in order to reduce restrictions on fixed-term contracts as well as monetary incentives such as reduced social contributions paid by employers. Does this imply a reduction of security? The authors demonstrate that from the perspective of economic theory, it is not possible to assume differentials between standard and non-standard wages. No existing theory can answer this question; it is therefore an empirical issue that is studied in the book. In order to study the impact of flexibility on security, the authors choose one definition of ‘security’. They consider ‘work security’ to be an issue of employment continuity related to organizations and regulations intended to ensure it, and they question the link between flexibility and security according to three main issues: they analyse the impact of flexibility on employment security, wage dynamics and social security. In order to do so, they remind us that empirical studies consider three parameters for the study of work security: employment continuity, adequate earnings and adequate resources provided by the social protection system. The authors then investigate how types of work contract affect worker security.
In Italy, the formalization of regulations of work has always been a complex issue due to a diverse set of laws and collective agreements. The governments of the 1950s and 1960s developed a ‘protective approach’ to work based on the notion of full-time and open-ended contracts. From the late 1970s to the 1990s, the economic crisis and the reorganization of the industrial sector led to a gradual liberalization of regulations governing labour relations, as occurred in many advanced capitalist countries at that time. Flexibility was then considered as a way to support the technological and organizational challenges of industrial production. In the 1990s, flexibility was still a central paradigm in politics, and it was said to reduce unemployment. For instance, in 1996, temporary agency work, which had been banned, was permitted and regulated in the country. In general, a progressive reduction of constraints in the recruitment of workers through non-standard contracts is emerging as a trend. This creates a dualism in the labour market, with open-ended contracts on the one hand and a variety of fixed-ended contracts on the other. The analysis of the political economies of Germany, Spain and Japan, although based on different historical orientations, shows that these countries have all instituted labour market reforms on the margins (that implies the creation of a dualist labour market) to cope with high unemployment rates.
In their study, the authors focus first on the link between flexibility and employment security through work careers and employment continuity. They remind the reader to distinguish contract discontinuity from employment discontinuity, because the end of a contract does not inevitably imply the end of employment. However, they demonstrate empirically through their analysis of Work Histories Italian Panels (WHIP) data that in Italy, although open-ended contracts are not necessarily permanent, they are less related to work insecurity than fixed-ended contracts. This is partly due to the fact that non-standard contracts rarely evolve into standard contracts, unlike in Germany.
The next step is an analysis of wages for non-standard workers, built on the assumption that they may receive better wages than standard workers as a compensation for greater work discontinuity. There is evidence that non-standard workers are underpaid even though the various and heterogeneous forms of compensation make it difficult to analyse. Even though, as the authors note, previous studies have usually focused on one form of fixed-term contract, they do show that in each country some categories of workers are more precarious than others; for instance, apprenticeship and independent contractors have more precarious status as well as limited bargaining power.
The authors then assess the opportunities for non-standard workers to avail themselves of social protection schemes. Their starting point is to study whether a worker departing from a labour relationship still has the ability to benefit from social security elements. What are his or her rights? What are the conditions of access? The interaction between the labour market and the social protection system regarding unemployment protection is the main analytic factor, but the authors also consider maternity and sickness benefits as well as pension subsidies. They use the WHIP data and pay special attention to the changes that occurred after the implementation of new measures in the wake of the economic crisis in the 2000s. Indeed, out of the four countries studied, Italy is the only one that has not tightened its eligibility conditions for social insurance since the 2000s. However, data analysis shows that even though the system has been improved, there is a lower level of protection for non-standard workers. According to the authors, this comes from the combination of two modes of providing the protection: social insurance and a flexible labour market.
In Italy, the unemployment compensation system has been exclusively based on social insurance related to labour relations, excluding independent workers. The level of subsidies for unemployment remained extremely limited until the 2000s, and part-time workers are currently subject to limitations in social protection due to the fact that subsidies are calculated on a pro rata temporis principle. While the measures taken in the 2000s have increased the proportion of the active population eligible for unemployment compensation, more than 1 million persons remain uncovered in Italy. The authors then show that the level of protection is also lower for non-standard workers regarding other dimensions of work. They do not assume that only workers under non-standard contracts are precarious. Using the WHIP database, they show that precariousness is unevenly distributed across the labour force, influenced by such factors as gender, age, sector, or size of the firm. Above all, precariousness depends on the type of contract and the length of time a worker is under a non-standard contract. The data also show that numerous non-standard workers are not precarious, but also that unemployment benefits are ineffective in lifting workers out of precariousness. This leads to the main conclusion: the burden of advanced economic societies is linked to the fact that social protection systems are required to compensate for the double lack of employment and wage security, but they are not equipped to manage this challenge because they tend to measure careers in terms of continuity. One of the authors’ recommendations is that in order to cope with precariousness states need to define an adequate set of rights for all workers and to limit excessive turnover, rather than restricting the range of options for employers and employees.
This book addresses current major issues for advanced economies, where more knowledge tools exist in order to guide political decisions. In this sense, it is important that this study be followed by comparable investigations into conditions in other countries.